Gold edges up after S.Korea purchase

GMT
21:29 2011
Tuesday ,02
August

Seoul - Arabstoday

South Korea spent more than a billion dollars in its first gold purchase in more than a decade, as uncertainty about global growth and sovereign debt push central banks around the world to diversify foreign reserves.A brittle global economic recovery and precarious debt conditions in the United States and Europe have boosted the safe-haven appeal of gold, lifting bullion to a record high on Friday.The Bank of Korea said in a statement on Tuesday it bought 25 tonnes of gold over the past two months, raising its gold holding to 39.4 tonnes, news that helped lift spot gold by around $6 from late on Monday.Reserve currencies, like the dollar and euro, “have been losing their clout since the recent global financial crisis partly due to abnormal monetary policy adopted in many countries and fiscal deficit problems,” said an official at the central bank who declined to be named because he was not authorised to speak to the media.Data on 27 major economies from the Bank for International Settlements shows the dollar’s inflation-adjusted real effective value has dropped by 10 per cent in the past two years and the euro has lost 6 per cent, reflecting the sharp increase in the amount of each currency in circulation.South Korea’s gold holdings remain far smaller than that of other Asian central banks, with China, which ranks sixth globally, the biggest with 1,054.1 tonnes by the end of May, according to World Gold Council data. [ID:nL6E7IS0TP]Japan, No. 9 globally, has 765.2 tonnes of gold, or 3.3 per cent of its total reserves, and 11th-ranked India has 557.7 tonnes, or 8.7 per cent.“South Korea’s central bank seems a little late to the party, but gold investors should continue to expect price support as central bankers around the world are underinvested in the yellow stuff,” said Sean McGillivray, head of asset allocation at Great Pacific Wealth Management.“Investors and central bankers are looking to protect purchasing power, diversifying into the currency of last resort, gold.”
From / Gulf today